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HomeMy WebLinkAboutStaff Report 3552 City of Palo Alto (ID # 3552) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/4/2013 City of Palo Alto Page 1 Summary Title: BAO and Award of Contract for CNG Honda Civics Title: Adoption of a Budget Amendment Ordinance in the Amount of $468,283.19 to Fund the Purchase and Make Ready Costs of up to 17 Honda Civic Natural Gas Vehicles and Approval of a Purchase Order with Stevens Creek Honda in an Amount of $459,783.19 to Purchase up to 17 Compressed Natural Gas Honda Civics From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1. Adopt the attached Budget Amendment Ordinance (BAO) in the amount of $468,283.19 to provide an appropriation for the replacement of up to seventeen (17) Honda Civic Natural Gas Vehicles through the Equipment Replacement CIP (VR-13000) and 2. Approve and authorize the City Manager or designee to execute a purchase order with Stevens Creek Honda in the amount of $459,783.19 for the purchase of up to seventeen (17) Compressed Natural Gas Honda Civics. This amount includes $468,283.19 for the vehicles and $8,500 for minor modifications necessary to make these vehicles ready for service. Discussion The vehicle and equipment replacement policy described in City Policy and Procedures 4-1 (Vehicle and Equipment Use, Maintenance, and Replacement), provides for the on-going replacement of City fleet vehicles and equipment. City of Palo Alto Page 2 Replacements are scheduled using guidelines based on age, mileage accumulation, and obsolescence. Audit of Vehicle Utilization and Replacement This purchase is being conducted in keeping with recommendations from the 2010 “Audit of Fleet Replacement and Utilization”, which recommended that when possible, future vehicle replacements be alternative fuel vehicles. The vehicles being replaced through this purchase have, on average, greatly exceeded the minimum mileage accumulation of 2,500 miles or 50 usage hours annually. The Fleet Review Committee (FRC), which is comprised of representatives from the City Manager, Public Works, Fire, Utilities and Administrative Services Departments has reviewed these vehicles proposed for replacement and has authorized their replacement. The FRC approved the replacement of these vehicles in accordance with the audit recommendations. The approval was based on:  An examination of each vehicle’s current usage;  An analysis of each vehicle’s operating and replacement costs;  A comparison of the age, mileage, operating cost and performance of each vehicle with others in the class; and  An analysis of alternatives to ownership, such as mileage reimbursement; pooling/sharing; the reassignment of another underutilized vehicle, or renting. The City’s pool car fleet currently includes 15 compressed natural gas (CNG) fueled sedans. These pool cars are shared by multiple departments and are located at several city facilities including City Hall, Municipal Services Center, Lucie Stern, Elwell Court, and Cubberley Community Center. Unlike gasoline fueled vehicles, CNG vehicles come with fuel tanks that are only certified for use for a limited amount of time. Once the expiration date on the fuel tanks is reached, the CNG vehicles can no longer be operated. At that point, the options are to either have new fuel tanks installed (at a cost of approximately $6,000 per City of Palo Alto Page 3 vehicle) or eliminate the vehicles from the fleet for a considerably low resale value. The City currently operates 15 CNG Honda Civics that have fuel tanks scheduled to expire in 2013. Staff recommends replacing the existing CNG pool cars now while the fuel tanks are still useable so that there is an opportunity to benefit from the resale value. There is currently a strong demand for alternate fueled vehicles which is creating higher than normal resale values on CNG vehicles, as long as the vehicles’ fuel tanks are not yet expired. Because the cost to re-tank a vehicle is more than the resale value, staff does not recommend re- tanking the vehicles. Fourteen of the fifteen current CNG vehicles will be replaced with similar CNG vehicles. One CNG vehicle will be replaced with a non- CNG vehicle to meet the individual department’s specific need for more carrying capacity and longer driving range per tank of gas. Staff is also proposing to expand the use of alternative fuel vehicles and replace two existing gasoline fueled sedans with CNG vehicles. The first vehicle is a 2000 Chevrolet Impala assigned to the Police Department, with an odometer reading of 110,000 miles. Fleet Management staff has realized higher than normal maintenance costs on this vehicle. Policy and Procedures 4-1 recommends that Police staff cars be replaced at 5-years and/or 70,000 miles. This vehicle has exceeded the replacement criteria in both mileage and age. The second vehicle that will be replaced is a sedan that was damaged in a vehicle accident and considered totaled. The final CNG vehicle is designated for the newly hired Fire Chief. To continue expanding the use of alternative fuel, standardize vehicles within the fleet, and to meet the needs of the department, staff recommends that a Honda CNG be purchased for this application. Fleet Management is working toward standardizing vehicles whenever possible to take advantage of efficiency and cost savings related to bidding, equipment mechanic training and parts inventories. The FRC determined that there are no alternatives to outright replacement of the vehicles included in this report. They are each used on a continuous daily basis, are at remote locations, and/or are already being used as part of the shared pool system. There are no similar, underutilized vehicles available to use as replacements for these vehicles. City of Palo Alto Page 4 Bidding and Selection Process On two occasions in 2012 (November 5 and December 5), staff initiated a Request for Quotations (RFQ) to purchase these vehicles. On both occasions, the city received no bids. Staff contacted potential vendors to identify why no bids were received and the response was that vendors were concerned about being able to provide all of the vehicles at one time. Honda is no longer building the 2012 model and does not yet have enough stock of the 2013 models for vendors to commit to obtaining all of the units. Staff then contacted several vendors to obtain individual pricing and identify workable delivery schedules. Pricing from the three lowest bidders was: Oxnard Honda $26,417 per car plus tax and License Anderson Honda $25,707 per car plus tax and license Stevens Creek Honda $24,744 per car plus tax and license Staff has reviewed all informal bids submitted and recommends that the bid submitted by Stevens Creek Honda be declared as the lowest bidder. Stevens Creek Honda will acquire as many vehicles as are available with the goal of purchasing seventeen cars. If seventeen cars are not available, Palo Alto will purchase as many vehicles as possible and the remainder of the cars will be purchased later in the year. As of February 6, 2013, there are enough cars available for this purchase. Staff met with Stevens Creek Honda staff and has also checked references supplied by the vendor for previous contracts and has found no significant complaints. Resource Impact The attached Budget Amendment Ordinance will provide for the transfer of funding from the Vehicle Replacement Fund Reserve into the current year’s Scheduled Vehicle and Equipment Replacement CIP (VR-13000). As a result of this appropriation, the Vehicle Replacement Fund Reserve will decrease to $6,697,584. City of Palo Alto Page 5 Policy Implications Authorization of the contract does not represent any change to the existing policy. Purchase of these vehicles supports Comprehensive Plan(s) N5, N40 and N41 by supporting the use of alternative fuel vehicles and also removing older, more polluting vehicles from the roadways and replacing them with newer, more efficient ones. Environmental Review The vehicles being supplied are in conformance with all applicable emissions laws and regulations. Accordingly, this purchase is exempt from the California Environmental Quality Act under the CEQA guidelines (Section 15061). Attachments:  Attachment A- Budget Amendment Ordinance (DOC) ORDINANCE NO.xxxx ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2013 TO PROVIDE AN APPROPRIATION OF $468,283 TO CAPITAL IMPROVEMENT PROGRAM PROJECT NUMBER VR-13000, SCHEDULED VEHICLE AND EQUIPMENT REPLACEMENTS The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 18, 2012 did adopt a budget for fiscal year 2013; and B. City policy on vehicle and equipment replacement provides for the on-going replacement of City fleet vehicles and equipment. Specifically, Policy 4-1 prescribes replacement intervals using guidelines based on age, mileage accumulation, and obsolescence; and C. The Fleet Review Committee (FRC) approved the purchase of seventeen Compressed Natural Gas (CNG) Honda Civics for $459,783 to replace fifteen CNG-fueled sedans and two gasoline-fueled sedans. Funding for these vehicles was not included in VR-13000 Scheduled Vehicle and Equipment Replacements; and D. Funding of $8,500 is needed for minor modifications to make these vehicles ready for service; and E. These purchases are being conducted with full consideration for the Audit of Vehicle Utilization and Replacement which was conducted by the City Auditor; and F. City Council authorization is needed to amend the 2013 budget as hereinafter set forth. SECTION 2. The sum of Four Hundred Sixty-Eight Thousand Two Hundred Eighty-Three Dollars ($468,283) is hereby appropriated to CIP Project Number VR-13000. SECTION 3. The Vehicle Replacement Fund Reserve is hereby reduced by Four Hundred Sixty-Eight Thousand Two Hundred Eighty-Three Dollars ($468,283) to Six Million Six Hundred Ninety-Seven Thousand Five Hundred Eighty-Four Dollars ($6,697,584). SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 5. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 6. The vehicles being purchased are in compliance with all applicable emissions laws and regulations. Accordingly, this purchase is exempt from the California Environmental Quality Act under the CEQA guidelines (Section 15061). INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: _________________________ City Clerk __________________________ Mayor APPROVED AS TO FORM: _________________________ Senior Assistant City Attorney __________________________ City Manager __________________________ Director of Public Works __________________________ Director of Administrative Services